Abstract:
A very common business strategy in the market of goods is to provide a free trial version of
their good or service. This is done to increase the demand as well as the brand value of the
product. Some common examples of the business models which work on this business strategy
include Jio sim cards, Netflix, Amazon Prime, Antivirus software, and many other websites.
This aims to extend the monopoly free trial model of (H. Cheng and Y. Liu, 2008)[1] to duopoly
competition. We find the optimal price and free trial time in simultaneous and sequential games
to study the duopoly competition in presence of free trial time. We also discover the dependency
of equilibrium price, free trial time, and profit on the misfit cost of the software and the speed
of consumer’s belief update about the functionality of the software